Whilst the world focuses on the Greek bailout package and an 8-year growth plan that could be blown out of place by an over-exuberant 80th birthday party, the world of ecostats continues with German and Eurozone PMI figures. “Happy Birthday to you, happy birthday to you, happy Birthday to you, but don’t blow out the candles, or Mount Zeus might fall down.”
German Purchasing Manager Index for Services were expected to grow in February from 53.7 to 53.9, but they actually posted losses of 1.1, falling to 52.6. German PMI for Manufacturing also declined in February, falling from 51.0 to 50.1 – leaving the index 1.4 below expectations. Although both PMI remain above the crucial 50.0 level that marks contraction from growth, decline in the Eurozone’s flagship economy is very damaging to the 17-nation bloc as a whole.
European Monetary Union PMI figures subsequently suffered in a similar fashion. Services fell by 1.0 from 50.4 to 49.4 and Manufacturing remained below 50.0 at 49.0. February’s figures pile pressure on the Eurozone after a -0.3% fall in GDP in Q4 2011. If Q1 2012 posts a negative Gross Domestic Product then it will bring about a technical recession – defined by two consecutive quarters of contraction. A recession would prove damaging to the Eurozone as its psychological effect on investors could see them sell their Euro denominated assets.
Interestingly, the Pound to Euro Exchange Rate has been effected more from the BoE’s Minutes report than either the German PMI figures or Greece securing its debt package. GBP/EUR currently stands at 1.187 (11:55 GMT).